Retirement
The big misunderstandings about credit score damage
Despite money and finances being a top concern for Australian investors, most are unaware of the impacts late payments have on their personal credit score, according to new research.
The big misunderstandings about credit score damage
Despite money and finances being a top concern for Australian investors, most are unaware of the impacts late payments have on their personal credit score, according to new research.
Results from Experian reveals that 97 per cent of Australians are unaware of how damaging late payments are to credit scores.
Speaking with nestegg, ANZ general manager for credit services Tristan Taylor said he believes there is a misunderstanding about consumer awareness.
“Fifty-six per cent of people know there will be an impact, while 97 per cent of people misunderstand how big the impact could be,” he said.
“What we’ve seen in the research is that your score could be impacted by up to 22 per cent in some cases if you miss one payment, but most people think it is far lower,” said Mr Taylor.
The drop increases to 26 per cent with two missed credit card repayments and 42 per cent for those with three or more missed credit card repayments in the last three months.
Flow-on effects
Credit reports are an instrument that banks use to help determine the risk a consumer is to the banks when repaying the debt.
The lower the credit score, the less likely a bank will provide credit. And if they do, it can potentially be at a higher cost.
“Those are a tool to gain credits and particularly gain the best credit you can find, something that is appropriate for you and at good rates,” said Mr Taylor.
“So, by having an impact on your credit score that, amongst other things, could have an impact on the type of credits and the flexibility of that credit,” said Mr Taylor.
Costs of getting a credit report
Mr Taylor reveals that due to current Australian legislation, getting a credit report is easy and affordable for any Australians.
“It doesn’t cost you in monetary terms. You can get it for free and it does not impact your score to view it,” said Mr Taylor.
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